The Liberal Democrat peer, knighted in 1997, made that admission during a public inquiry hearing yesterday, March 13, prompting current party leader Jo Swinson to call for his suspension.
Replying to a tweet today from specialist abuse lawyer Richard Scorer, she confirmed that an internal probe is already under way.
“The party has rightly begun a disciplinary investigation into Lord Steel following his revelations,” said the East Dunbartonshire MP.
“Clearly this is incredibly serious, and he should be suspended while this takes place.”
A party meeting is expected to held tonight, March 14, to discuss how to deal with the 80-year-old, of Selkirk.
The former Borders MP has denied “hiding his head in the sand” over child abuse allegations against the late Smith.
Lord Steel, leader of the Liberal Party from 1976 to 1988 and briefly of the Liberal Democrats afterwards, told told the Independent Inquiry into Child Sexual Abuse that he’d asked Smith in 1979 about claims he had abused boys at a Rochdale hostel and learned that they dated back to his time as a Labour councillor in the 1960s.
He came away from that conversation assuming that Smith had committed the offences he was accused of because he did not deny them, said Lord Steel.
He said Smith had told him the police had investigated the claims and taken no action.
No formal inquiry was then held by the party into the claims, and it was suggested that that was because Lord Steel did not want to get involved in a confrontation with Smith, but he told the hearing: “I wouldn’t have been hiding my head in the sand.
“These allegations all related to a period some years before he was even an MP and before he was even a member of the party, therefore it did not seem to me that I had any position in the matter at all.”
Smith, MP for Rochdale in Lancashire from 1972 to 1992, was accused of sexually abusing numerous boys, and in 2012, two years after his death at the age of 82, the Crown Prosecution Service formally admitted that charges should have been brought against him years previously.
Lord Steel’s conversation with Smith was prompted by a story in the political magazine Private Eye, and that report, in turn, was based on news broken by the Rochdale Alternative Press in 1979 that the police had investigated Smith over allegations of abuse against teenagers at the town’s Cambridge House hostel.
Lord Steel told the inquiry: “He accepted the story was correct. Obviously I disapproved, but as far as I was concerned it was past history.”
Inquiry counsel Brian Altman then asked him: “What gave you confidence that if Cyril Smith was confessing to you in 1979 that 10 years or more before that he assaulted children that he wasn’t continuing to do it on your watch?”
The peer – MP, as David Steel, for Roxburgh, Selkirk and Peebles from 1965 to 1983 and for Tweeddale, Ettrick and Lauderdale from 1983 to 1997 – replied: “He was no longer involved within the children’s home and indeed it had closed down.”
Mr Altman went on: “In a sense, he is confessing to you he has committed these acts which have been alleged against him.
“I am seeking to understand from you why that was the end of the matter?”
The former Scottish Parliament presiding officer told him: “He was not an MP at the time. He wasn’t even a member of the party.
“I did not feel I had any locus in it all other than being a reader of the paper.
“The party was unaware of all this, and I could easily have been unaware of it if I had not been a subscriber of Private Eye.”
Mr Altman suggested: “He could, for all you knew, still be offending against children.”
Lord Steel said: “I have to admit that never occurred to me, and I am not sure it would occur to me even today.
“If I had any suspicion that these activities had been continuing or he had been involved in it as an MP, I certainly would not have recommended him for a knighthood. That would have been my natural instinct.”
In a June 2018 appearance on BBC2’s Newsnight programme, the Fife-born peer appeared to describe child sex abuse allegations against Smith as “tittle-tattle” and “scurrilous hearsay”, but he now insists that was a misunderstanding.
He told the hearing he thought he was not talking about the conversation he’d had with Smith, knighted in 1988, but about claims made in a book by another former Rochdale MP, Simon Danczuk.
He explained that he recalled speaking to Mr Danczuk after the book was published and said: “I told him what I thought a lot of it was very doubtful.”
The peer ended his testimony by saying: “I must say I am a bit concerned about the unqualified way in which you cannot libel the dead.
“The dead have got relatives and friends, and I think it is rather scandalous the way some things have been said about people who are not around to answer.”
Earlier on, Liberal Democrat president Baroness Brinton said that by 1991 swift action would have been taken against any party member charged with serious offences, including them being suspended and expelled as soon any court case concluded.